Five Percent of Career Training Programs Risk Losing Access to Federal Funds; 35 Percent Meet All Three Standards Under Gainful Employment Regulation

Today, the Obama Administration took another step in its ongoing effort to improve transparency, lower college costs, and enhance value for students, by releasing new data on career training programs.

The new data, which covers career training programs at public, for-profit and non-profit schools, show that five percent of themall located at for-profit collegesdo not meet any of three key requirements of the Department's Gainful Employment regulation. Eventually, these for-profit programs could lose access to federal student aid if they cannot improve performance.

Education Secretary Arne Duncan said, "Career colleges have a responsibility to prepare people for jobs at a price they can afford. Schools that cannot meet these very reasonable standards are on notice: invest in your students' success, or taxpayers can no longer invest in you."

The national data released today is for informational purposes only and is meant to give schools time to make needed changes and improvements before enforcement of the regulation begins in the fall of 2012. No program would lose eligibility before 2015.

The Department shared program-level data with individual institutions on Thursday, June 21st and is releasing it publicly today after giving schools time to evaluate the information.

Under the Gainful Employment regulations, career training programs will continue to qualify for federal student aid if they meet one of the following three metrics in at least three out of four consecutive years:

Loan Repayment Rate: At least 35 percent of the program's former students are repaying their loans;

Debt-to-Earnings Annual Ratio: The estimated annual loan payment of a typical graduate does not exceed 12 percent of his or her total earnings;

Debt-to-Discretionary-Earnings Ratio: The estimated annual loan payment of a typical graduate does not exceed 30 percent of his or her discretionary income.

Today's data release is part of an ongoing effort by the Obama Administration to make college costs more transparent for education consumers. Last week the Department published its tuition watchlist, which details schools with the highest and lowest published sticker price, schools with the highest net price once grants and scholarships are factored in, and those schools where prices are rising the fastest.

And in the coming weeks, the Administration is set to release its model financial aid-shopping sheet. The shopping sheet, which the Administration will encourage all institutions of higher education to voluntarily adopt, will tell prospective students how much aid they will receive in grants and scholarships; how much they'll need to borrow in student loans; the difference between private loans and federal students loans; and the average student loan payment after graduation.

"We want to arm students and parents with the information they need to make smart educational choices," said U.S. Secretary of Education Arne Duncan. "Students need to know up front how much college will actually cost them instead of waiting to find out when the first student loan bill arrives. And they want to know if they are likely to get a job. These informational rates are for transparency purposes and will help unravel the mystery of higher education quality and pricing."

Once the Gainful Employment regulations are fully in effect, the Department will measure programs with at least 31 former students over a four-year period. Today's release covers 3,695 programs in 1,336 schools over a two-year period, comprising 43 percent of students in career training programs. Of these programs:

35 percent are meeting all three metrics

31 percent are meeting two of the three metrics

29 percent are meeting one of the three metrics

The remaining five percent193 programs in 93 different schoolsdid not meet any of the three metrics.

The Department provided further information about the 2011 Gainful Employment Informational Rates in a June 26 webinar for institutions and other interested parties. A copy of the slide deck that was used, including notes that track the comments made by the presenter, can be accessed directly at http://ifap.ed.gov/ifap/ifapMedia.jsp. Informational rates for individual programs and additional data can be found at: http://federalstudentaid.ed.gov/datacenter/gainful1.html.